NJ panel calls for overhauling pensions, schools and more

By MIKE CATALINIAugust 9, 2018

TRENTON, N.J. (AP) — A bipartisan task force formed by New Jersey Senate President Steve Sweeney recommended Thursday that the state overhaul its pensions and school systems among other changes to address a cost “crisis.”

The Democratic lawmaker and the New Jersey Economic and Fiscal Policy Workgroup unveiled their report Thursday at the statehouse after what they said were months of reviewing issues that long burdened the state, particularly its public worker pension and retiree benefits.

Richard Keevey, a panelist on the committee and senior policy fellow at Rutgers Bloustein School of Planning and Public Policy, estimated the liability of pension and benefits is about $152 billion, compared with a fiscal 2019 state budget of $37.4 billion.

“We are in a crisis right now,” said Sweeney, who said the Democrat-led Legislature would likely be taking up some of the panel’s recommendations.

The report doesn’t specify how much the changes could save or potentially cost taxpayers.

Republican state Sen. Steve Oroho, who co-chaired the committee, said the focus was on making the state more affordable.

Democratic Assembly Speaker Craig Coughlin echoed those sentiments and said lawmakers would “take a thoughtful look” at the proposals.

Gov. Phil Murphy, a fellow Democrat, said in a statement that he welcomes the conversation, but added that the problem isn’t only how much the state spends, but how.

“Protecting tax breaks for the wealthiest and special interests while asking the middle class to shoulder more and more of the burden isn’t fair,” he said.

The panel is just the latest committee to look into issues that have ailed New Jersey for decades.

Former Republican Gov. Chris Christie commissioned a panel to examine the state’s underfunded pension before he left office this year, and Democratic Gov. Phil Murphy sat on a similar committee that examined similar issues in 2005.

Among the recommendations are shifting state and local workers from a defined-benefit pension to a 401k-style plan for new workers and those with fewer than five years of service. The panel is also calling for cutting health benefits for retirees from platinum plans to gold.

The panel is also calling for merging school districts into regional systems that would go from kindergarten to 12th grade. Under the current system roughly 300 of the state’s 600-plus districts range from kindergarten to fourth grade up to ninth grade. It also calls for permitting the voluntary establishing of up to two countywide districts as a pilot program.

Another proposal calls for reviewing the state’s sales tax exemptions. The committee also recommended exploring the viability of transferring major assets — like the New Jersey Turnpike system — to the state pension to lower the retirement system’s unfunded liability.